AbstractRh(I)-catalyzed cycloisomerizations of bicyclo[1.1.0]butanes provide a fruitful approach to cyclopropane-fused heterocycles. Products and stereochemical outcome are highly dependent on catalyst. The triphenylphosphine (PPh₃) ligand provides pyrrolidines, placing substituents anti to the cyclopropyl group. The 1,2-bis(diphenylphosphino)ethane (dppe) ligand yields azepanes with substituents syn to the cyclopropyl group. In this work, quantum mechanical DFT calculations pinpoint a reversal of regio- and diastereoselectivity, suggesting a concerted (double) C−C bond cleavage and rhodium carbenoid formation, driven by strain-release. The ligand-influenced cleavage step determines the regioselectivity of carbometalation and product formation, and suggests new applications of bicyclobutanes.